The government, on Friday, hiked gold Customs duty to curb imports. The basic Customs duty on gold has been increased from 10.75 percent to 15 percent. The move is likely to decrease the current account deficit (CAD).

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The CAD is the shortfall between the money received by selling products to other countries and spent to buy goods and services from other nations.

After seeing an unprecedented increase in imports of gold in the month of May, the government decided to hike the duties, government sources told CNBC-TV18.

Union Finance Minister Nirmala Sitharaman said: "India does not produce much gold. We are trying to discourage imports. If you can afford it, the country should get some revenue."

In May, over 100 tonnes of gold was imported. The surge in gold imports has yielded pressure on the domestic currency, which touched an all-time low of 79 against the US dollar on Friday.

Abhishek Jain, Partner Indirect Tax, KPMG in India, said that the change in Customs duty would slightly reduce the outflow on account of gold imports, and help provide stability to the INR to USD ratio.

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Meanwhile, MCX gold August futures rose almost 3 percent to touch the intraday high of Rs 52,032 per 10 grams as of 11:44 am. Silver followed suit, with white metal futures climbing over a percent to touch the intraday high of Rs 59,000 on the last count.

According to Naveen Mathur, Director Commodities and Currencies, Anand Rathi Shares and Stock Brokers, said: "Owing to pressure in the international gold, which is trading below $1800/oz, MCX Gold August may decline to Rs 51,400/10 gram."

Global oil benchmarks climbed higher on Friday as OPEC+ reasserted that it would stick to its planned oil output hikes in August and worries about global economy weighed on investor sentiment.

Global equity benchmarks registered a volatile trend. Indian equity indices made a negative opening as major Asian equities fell. The rupee touched an all-time low of 79 against the US dollar. The dollar Index — which gauges the strength in the greenback against six peers — was slightly down at 104.8.

Also Read: Oil prices rise after OPEC+ promises to stick to output hikes

First Published:Jul 1, 2022 1:21 PM IST